BNP Paribas Said To Plan US Merger

BNP Paribas is planning a full-blown merger of its US operations as it attempts to offset the impact of threatened US regulatory reforms for foreign banks, according to people familiar with the project.

The Financial Times reports that BNP, which is one of the world’s largest by assets, has drawn up detailed plans to combine BancWest, its US retail banking subsidiary, with its US corporate and investment banking operations in a move intended to improve its capital and funding efficiency in the country.

Bank executives believe that by going further than the proposed holding company requirement, and instead merging their businesses fully, they can extract greater synergies.

Under a merger, the retail banking operation would be a more useful source of funding for the corporate and investment bank because of limits on interbank lending. Deposits would be more easily recyclable into a range of CIB lending, from government bonds to corporate credit. The more diversified business model of a combined group would also lead to lower wholesale funding costs.